How Do We Keep Moving Forward?
Three and a half years ago, ANZ was the worst performer of [Australia’s] big four banks, regarded as the highest-risk bank investment by the market, and in strategic disarray. The transformation [CEO John] McFarlane has rendered over that relatively short period by implementing some exquisite forms of work-harder and work-smarter techniques on his staff has turned ANZ from the industry's lame duck into a highly polished money-making machine with an eye to its customer needs.”1
Such was the story reported in The Australian back in 2001 as ANZ finally turned the page on a dismal chapter in its history. In 1997, it had been grappling with almost A$2 billion of bad debt and a cost-to-income ratio of nigh on 63 percent. By the end of 2001, it had cleaned up the riskiness of its portfolio, doubled its share price, and reduced its cost-to-income ratio to an industry-leading 46 percent.
ANZ's transformation had begun in 1998, not long after John McFarlane took charge. An initial focus on cost cutting and risk restructuring soon gave way to a broader performance and health program structured around three themes: perform, grow, and break out. The “perform” strand continued the bank's earlier focus on cost drivers and productivity. “Grow” was about transforming the customer experience so as to become “the bank with the human face.” “Break out” was concerned with health, and aimed to create a high-performance culture.
One of the most innovative initiatives ...